How Are Sleep Labs Found to Be Violating the False Claims Act?

Sleep apnea is a potentially serious affliction in which breathing tends to stop and start several times while one sleeps. This sleep disorder is more widespread than one would image, with an estimated 22 million Americans being afflicted by it, according to the American Sleep Apnea Association. What’s worse is that around 80% of cases go undiagnosed.

To identify the most effective treatment option, one must first undergo several tests, which are mostly conducted in sleep labs or sleep centers. These tests can be expensive, ranging from $600 a night to as high as $5,000. Thankfully, these are covered by insurance.

Sadly, some sleep labs have been found to violate the False Claims Act, due to their questionable billing practices aimed at swindling undue reimbursements.

According to the Office of the Inspector General, Medicare reimbursement related to sleep labs rose from $62 million in 2001 to a whopping $235 million in 2009, with a steady rise of 8%-9% every year after that. Sleep labs were able to rob Medicare and Medicaid of vital funding by adopting unlawful techniques when certifying, coding and billing for tests.

Among such fraudulent practices are:

  • Double billing for a procedure by “unbundling” certain tests
  • Billing for two tests per patient in a day, which is impossible as the tests are conducted overnight
  • Manipulating PSG test results to inaccurately make patients eligible for CPAP testing
  • Prescribing CPAP equipment from the same lab or an associate / partner, which is in violation of Stark Law
  • Offering incentives for referrals for sleep testing
  • Conducting in-home tests, while billing them as in-lab tests, which are about fivefold higher in costs
  • Patients left unmonitored or being monitored by non-certified personnel

Using a variety of such tactics, sleep labs were able to bill more than $17 million for unnecessary sleep testing between 2005 and 2011, according to the OIG. Sleep apnea is estimated to be a $30 billion industry, which offers huge possibilities for such fraudulent activities. Such fraud can be caught and stopped only with the help of whistleblowers who seeks to do the right thing.